The end of the year will be here before we know it and there could be some large estate tax law changes on the horizon due to recent proposed legislation. Just recently, the House Ways and Means Committee released a draft bill that could greatly impact the existing estate planning environment. Below is a list of some potential changes:
- The current federal estate tax exemption amount is $11,700,000 per person. As of January 1, 2022, the federal estate tax exemption amount could potentially be cut in half to approximately $6,020,000 per person or $12,040,000 for a married couple. Under current law, this reduction was scheduled to occur after December 31, 2025, but this proposal makes that change happen at the end of this year instead.
- Grantor trusts could now be subject to estate tax which could fundamentally change the use of such trusts.
- GRATS, QPRTS, SLATS, and insurance trusts’ effectiveness may be impacted or limited.
- The current draft proposal eliminates valuation discounts in gifting passive, non-business-related assets.
The above proposals may have a serious impact on potential or existing estate planning. If you are considering making a gift in 2021 to take advantage of the current gift tax exemption of $11,700,000 per person, then it would make sense to act quickly. If you are not considering making a gift, it still may be worth reviewing your estate plan now to ensure that your plan is nevertheless in accordance with your wishes for the future of your family and loved ones.
Please contact FMJ’s Trusts & Estates attorneys at estateplanning@fmjlaw.com if you have any questions about the proposed 2022 estate tax exemptions or if you have any other estate planning questions that you would like to discuss.
The individual attorneys can also be reached at David Ness at david.ness@fmjlaw.com, or Karen Schlotthauer at karen.schlotthauer@fmjlaw.com.
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